Treasury Action: yields rebounded from lows Treasury Action: yields rebounded from lows though are stalling again before highs after the drop in initially jobless claims washed through, leaving the T-note yield back below 1.93% compared to the 1.9350-1.8903% pre-open range. The 2s-10s spread remains steady near +132 bp. Fedspeak from both Bullard and Lockhart confirms likely policy tightening ahead, though timing remains open ended and the markets should not be surprised by now.

U.S. initial jobless claims preview: U.S. initial jobless claims preview: jobless claims are expected to slip 1k to 290k (median 291k) in the week-ended March 21, while continuing claims are expected to fall to 2,345k from 2,417k for the week-ended March 14. Forecast risk is upward, however, as there is risk of rebounds as analysts pass holiday induced gyrations. preview for more.

08:05 EDT

N.Y. FX Outlook N.Y. FX Outlook: The dollar is broadly lower into the N.Y. open, with the unit continuing to correct recent strength. USD-JPY is on one month lows, after trading into 118.33, as EUR-USD rallied to levels last seen on March 6, peaking at 1.1052. Gold prices shot up to near $1,1220, while oil prices rallied 5% to over $52/bbl following news of Saudi airstrikes in Yemen. U.S. equity futures indicate another red open on Wall Street, which won't help dollar sentiment. On the calendar, weekly jobless claims are due at 8:30 EDT, with Markit flash March services PMI due at 9:45 EDT.

Treasury Market Outlook: risk off is the general theme Treasury Market Outlook: risk off is the general theme of action as Saudi Arabia and several of its neighbors attack rebels in Yemen. That gave Treasuries a bounce with the 10-year yield dropping to 1.88% from yesterday's rise to 1.92% after a poor 5-year auction and hawkish comments from the Fed's Lockhart. Core sovereigns are also posting small gains. The increased tensions in the Mid East have seen global equities decline as they follow the bearish tone from Wall Street where the Dow plunged 292 points yesterday. Data overnight showed a better than expected German GfK consumer confidence print and U.K. retail sales figures. Today's U.S. calendar includes the $29 B 7-year auction, the last of the week. On the data slate are initial jobless claims for the week ended March 21, the March flash Markit services PMI, and the KC Fed manufacturing survey for March. The aforementioned Lockhart will speak again on monetary policy and the economy, and his thoughts will be closely followed. Tomorrow's calendar has just revised Q4 GDP and the final print on consumer sentiment from the University of Michigan.

Market selloff appears set to continueStock futures are suggesting a sharply lower open as the market appears ready to continue yesterday's selloff. The futures may be reacting to reports that Saudi Arabia and its Gulf allies began bombing targets in Yemen as the country moves closer to a civil war. The news has caused a spike in crude oil prices and nervousness in Europe and the Middle East. Today U.S. investors will be watching the jobless claims reports and the natural gas inventory report for clues about the economy.

07:15 EDT

FX Update: USD-JPY dove to one month lows FX Update: USD-JPY dove to one month lows. News of the Saudi-led military intervention in Yemen saw oil prices rally and the dollar decline. USD-JPY led the way in forex markets, dipping below 119.00 for the first time in a month, while EUR-JPY fell to three-day lows. The spike in oil prices hit stock prices, and the yen gained amid its usual inverse correlation to risk appetite in financial markets. USD-JPY's 50-day moving average at 119.23 and the 200-day moving average at 118.85 were breached on route to a low of 118.33. Dollar losses against the euro were less pronounced. EUR-USD traded to a peak of 110.52, which according to our chart breached the Mar-17 post-FOMC high by one pip. AUD-USD, meanwhile, fell to a three-day low of 0.7801, taking out its 20-day moving average at 0.7818 on route.